[Thurs]: Global meat production may fall for the first time in 20 years, the United Nations said. The impact of African swine fever in China has been widespread, with nearly 10,000 slaughter houses in the country beginning to test fully for the disease on July 1, Steve Wagner of CHS Hedging said… [Weds]: National carcass base down 23 cents… Iowa-Minnesota carcass base up 43 cents… USDA reported carcass cutout values this afternoon were down 73 cents… August hog closed moderately lower, with choppy trade early, says Hightower. “Talk that a shutdown in exports could cause the pipeline to fill up and slow down helped to pressure,” they said. Talk of poor packer margins could also cause some backup of hogs in the country…
Farm Commodity Newsletter/Iowa Farmer Today
Thu 5/9/2019 8:52 AM
Lean hogs - “All eyes will be on export sales (today) and trade negotiations after that,” Blue Line Futures said. “We have not seen China step in on weekly exports in several weeks, the bull camp needs that trend to change.”
The market is currently entering a “very strong seasonal period for cash and pork product prices,” The Hightower Report said. However, China is currently charging a tariff of 62% on U.S. pork, and they will face pressure to reduce that as supply continues to tighten. “The collapse in the trade deal is a blow to the bulls, but does not change the potential tightness in China and global pork supply.”
Meat production down globally
Global meat production may fall for the first time in 20 years, the United Nations said. The impact of African swine fever in China has been widespread, with nearly 10,000 slaughter houses in the country beginning to test fully for the disease on July 1, Steve Wagner of CHS Hedging said.
Cattle is “extremely oversold,” The Hightower Report said, however the short-term supply flow remains active. “Open interest is down sharply in the past few weeks and the market is probing for a short-term low,” they said.
Wed 5/8/2019 4:43 PM
In weighted average negotiated prices for barrows and gilts, USDA reported;
National carcass base down 23 cents to $79.04/cwt.
National live down 76 cents to $61.04/cwt.
Iowa-Minnesota carcass base up 43 cents to $80.48/cwt.
USDA reported carcass cutout values this afternoon were down 73 cents to $84.94/cwt.
August hog closed moderately lower, with choppy trade early, says Hightower. “Talk that a shutdown in exports could cause the pipeline to fill up and slow down helped to pressure,” they said. Talk of poor packer margins could also cause some backup of hogs in the country.
Stewart-Peterson says pork values have been surging over the past few days, which should boost packer margins. At midday, all three nearby contracts were holding onto their 50-day moving average support levels after tests earlier in the session.
Fed cattle fall hard today
August fed cattle prices closed sharply today – the lowest closing price since June 28, says The Hightower Report. An early rally disappeared as buying dried up near yesterday’s highs and the market experienced more long liquidation selling. Cash prices traded $2 below yesterday.
According to Stewart-Peterson, “trade negotiations between the U.S. and China will be watched very closely this week as the market tries to price in future exports.” Seasonal demand for pork is also expected to increase soon.
Corn holds ground, tariffs loom
July corn futures held firm just above contract lows, says ADM Ag Market View. The news that President Trump will set additional tariffs on China’s exports if trade negotiations don’t progress raised concerns about corn prices and export demand. No trade deal could send July corn below $3.50.
Stewart-Peterson says a price gap remains on the November chart between $8.62 ½ and $8.58. They say “given the oversold status of prices right now, a bounce to fill the gap is not out of the question.”
The corn market retreated Wednesday from drier forecasts next week in the Midwest, says Hightower. According to the National Weather Service, May 13-21 is supposed to be relatively dry. July corn settled down 2 ¼ cents at $3.64 ¼ after pushing down to a low of $3.61 ½.
Stewart-Peterson says a major Argentine crop scout increased corn production there to 49 mmt, and raised Brazilian estimates to 97 mmt. While expectations that reaching a trade deal this week have diminished, many are still hoping to see some progress prior to the weekend.
Large South American supplies of beans could prompt China to cancel all U.S. orders if trade talks fail this week, says Hightower. The China National Grains and Oils Information Center sees expanding feed needs for the year beginning in October, and expects bean exports to be slightly higher than a year ago.
Barchart says old stock beans are expected to be up 25 mbu in Friday’s USDA monthly report. Futures were down 2 to 3 ½ cents Wednesday, with meal futures higher and oil future prices lower in trading.
Weekly export sales are estimated near 75 to 250 mt, as compared to 122 last week, says ADM Ag Market View. USDA’s goal is 945 versus 901 last year. Above normal rains could slow maturation of the wheat crop, in addition to raising concerns about wheat quality.
Stewart-Peterson says “momentum studies are pointing higher for the wheat markets after making near term lows over the past week or so.” They add given the low price of wheat compared to corn, near term upside can be expected.